9th Circuit Affirms FTC Jurisdiction Over Non-Carriage Activities of Common Carriers
The Ninth Circuit, sitting en banc, held that the FTC has jurisdiction over the non-common carriage activities (here, the provision of wireless data services) of communications common carriers, reversing its previous panel decision in FTC v. AT&T Mobility. The decision vindicates the expansive jurisdictional position long taken by the FTC, and confirms that companies regulated as communications common carriers by the FCC cannot use that status to shield their unrelated business activities from FTC scrutiny.
In the underlying dispute, the FTC accused AT&T of deceptive advertising in its marketing of its “unlimited” cellphone data plans. Although these plans did not have a hard “cap” on data usage, AT&T allegedly began to limit the speeds once customers passed certain monthly thresholds. The action, brought under Sections 5 and 13 of the FTC Act, alleged that this practice of data “throttling” contradicted AT&T’s representation that the data plans were unlimited. AT&T countered that it was not subject to FTC jurisdiction, pointing to the “common carrier exemption,” a provision in the FTC Act that expressly excludes “common carriers subject to [The Communications Act]” from Section 5 enforcement.
At the time the case was filed, as now, data plans were not considered to be common carriage services under FCC rules interpreting the Communications Act. (The FCC’s now-revoked 2015 Open Internet Order briefly changed that classification, complicating this matter but ultimately not having an impact on the Ninth Circuit’s decision.) Instead, AT&T is only regulated as a communications common carrier with respect to its traditional telecommunications service offerings, such as monthly call/text plans. Accordingly, AT&T argued that the common carrier exemption was status-based—exempting all of an entity’s practices from FTC oversight due to its mere status as a common carrier. The FTC, rejecting this view, argued that the exemption is activity-based—exempting only those practices related to the activity of common carriage. The FTC has long contended that a status-based approach would leave a regulatory gap, placing the non-common carriage activities of common carriers outside the purview of both the FTC and FCC, a circumstance that Congress clearly did not intend. The FCC joined the FTC in this view of the common carrier exemption in a 2015 Memorandum of Understanding.
In its en banc decision, the Ninth Circuit sided with the FTC, clarifying that communications common carriers engaged in other lines of business cannot escape FTC oversight over those activities. Accordingly, they should take steps to ensure that their non-common carrier activities comply with the laws and regulations that the FTC enforces.